British construction firm Carillion has raised for the third time its merger proposal for engineering company Balfour Beatty, with new terms that value its rival at £2.1bn.
Carillion said under the new offer Balfour shareholders would have 58.3% of the combined firm. They would also get a cash dividend of 8.5p per share.
The raised offer came after talks with Balfour's biggest shareholders in the past week. Its negotiations with Balfour's board ended last month after the two sides clashed over the sale of Balfour's US engineering and design business Parsons Brinckerhoff.
Balfour, which built the aquatics centre for London 2012 and is transforming the Olympic stadium, has said it expects to sell Parsons Brinckerhoff for between £580m and £650m but Carillion insisted in earlier talks the sale should be cancelled.
Niall Dineen, portfolio manager at City investor AGF International Advisors and a shareholder in both the companies, said the improvement in the offer should be enough to get Balfour Beatty to engage.
"The Carillion argument regarding synergies seems sensible, the Carillion idea of keeping the Parsons Brinckerhoff business seems sensible and the improvement in the offer should be enough to get Balfour Beatty to engage with them," he said.
Carillion's previous proposal would have given Balfour Beatty shareholders 56.5% of the combined group, based on the current undiluted ordinary share capital of each company, it said. Balfour has rejected two takeover proposals by Carillion to create a giant that could compete for major international contracts against the likes of Spain's Ferrovial.
As well as the showcase Olympics buildings, Balfour is involved in the 30-year M25 road widening project and has rebuilt Blackfriars railway station in London.
Balfour said it would consider the new offer and make a further announcement in due course.
Carillion had been given a deadline of August 21 by British authorities to "put up or shut up", and the company urged Balfour to request an extension for discussions to continue.